French Council of State Clarifies Indemnification for Breach of Contract
On January 16, 2025, the French Council of State issued a letter titled “Lettre de la DAJ” (Letter from the Administrative Litigation Department) clarifying the conditions for indemnification in cases of breach of contract.
Key Points:
The letter states that in order for a party to be entitled to compensation for non-compliance with contractual obligations, the prejudice or loss suffered must be certain. This certainty requirement is a fundamental principle of French contract law.
The burden of proof lies with the party claiming damages to demonstrate the existence and extent of the prejudice suffered. The injured party must provide concrete and verifiable evidence to support their claim.
The letter emphasizes that the mere fact of a breach of contract does not automatically give rise to a right to compensation. The injured party must prove that the breach has caused them actual and quantifiable loss.
Implications for Contractual Disputes:
This clarification is a significant development in French contract law, as it sets a clear standard for assessing claims for indemnification. It is likely to have practical implications for businesses and individuals involved in contractual disputes.
Parties entering into contracts should now be more diligent in identifying and documenting potential risks and the potential consequences of breach.
In the event of a breach, the injured party will need to carefully assess the extent of their damages and be prepared to provide detailed evidence to support their claim for compensation.
Significance of the Council of State’s Decision:
The Council of State is the highest administrative court in France and its rulings set precedents that are followed by lower courts. This clarification provides greater predictability and certainty in the enforcement of contracts and will help to minimize disputes and streamline the litigation process.
Overall, the Council of State’s clarification on indemnification for breach of contract is a welcome development that reinforces the importance of providing clear and verifiable evidence in contractual disputes. It serves to protect both parties to a contract and promotes fairness and efficiency in the resolution of contract-related disputes.
Lettre de la DAJ – Le Conseil d’Etat précise que l’indemnisation liée au non-respect des obligations contractuelles nécessite que le préjudice subi soit certain
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